Ipsos Retail Performance, one of the world’s leading retail consultancies, and Irisys, the world’s No. 1 supplier of people counting and grocery queue management technologies, have partnered to take their global best practices and industry-leading solutions to North America – where demand for sophisticated innovation continues to grow at a record pace.

Amazon’s new Fire smartphone is less of a phone and more of a shopping powerhouse. A user simply points the device, clicks a picture of an object, and the phone scans more than 100 million potential matches. It then delivers a variety of shopping results right to Fire’s 3D screen. Checkout is just a few screen-taps away.

Canadian retailers plan to drop prices in a strategic move they believe will increase customer loyalty. But is it the right move? As recently as two years ago, Canada was in the midst of what seemed to be a retail boom. But high-profile entries – and falters – may have cooled the market.

Consumers overwhelmingly buy groceries at traditional supermarkets – and will continue to do so for at least the next decade. That’s how long it will take before ecommerce alternatives account for even 10% of grocery sales, according to a recent study by Kantar Worldwide.

The Kroger Co.’s faster checkout initiative was recently ranked No. 3 among the InformationWeek Elite 100 listing of the top business technology innovators in the United States. Kroger’s QueVision technology is powered by Irisys intelligent Queue Management solution. It uses infrared sensors and predictive analytics to arm store front-end managers with real-time data to make sure registers are open with customers need them.

Headquartered in Cincinnati, Ohio, USA, and established in 1883, Kroger is the USA's largest traditional grocery store chain, its second-largest general retailer based on revenue, and the world’s fourth-largest retailer.

Business Issue

A key component to Kroger’s business strategy is a “Customer First” commitment that is central to guiding every strategic decision. As part of this effort, Kroger felt a better checkout service would reward loyal customers and differentiate its service delivery from competing national discount chains and regional grocers.

Kroger decided to move from a 1+2 service commitment (1 customer being served in the checkout with 2 customers waiting in line) to a 1+1 service level (1 customer being served in the checkout and no more than 1 waiting in line).

In deciding this commitment, Kroger also assessed the level of additional cashier labor that would be required in-store to deliver 1+1. At the time, company officials anticipated they would need – and were willing to pay for – more cashiers if it reduced customer wait time at the checkout.

Solution

Irisys met with Kroger in 2007 and began trialing the Queue Management solution in 2008 with its IS&S Department to prove the technology. Once the technology’s accuracy and efficacy had been validated, Store Operations engaged in a four-store trial.

To prove the system further, Kroger progressed to a 19-store trial in Toledo, Ohio, in 2009. The results again showed the goal improvement in checkout service could be achieved with Irisys Queue Management system – and, again, without deploying additional checkout labor.

Moreover, the response from customers in Toledo was extremely positive and led to a noticeable improvement in customer satisfaction scores and uplift in sales. Kroger successfully trialed the Queue Management solution in two additional regions. In all of its regional trials, Kroger consistently identified improvements not just at the checkout – but in customer loyalty, shopping frequency, overall customer spend, and significantly increased sales.

While a defined ROI measurement underpinned Kroger’s business justification – i.e. a single capital investment in the Irisys system versus an ongoing revenue investment in additional cashier labor – the real driver behind deploying the Queue Management system was to improve checkout service.

Kroger commenced a rollout to all stores in 2010. The rollout of the system was accompanied by an in-store marketing campaign - advertising a “Faster Checkout at Kroger” – that extended externally via TV, radio, and print. Kroger branded the system internally as QueVision and began publicizing its results in 2013.

Business Benefits

Rodney McMullen, Kroger President and COO commented during Kroger’s 2nd quarter 2012 earnings conference call: “Our market share gains are a result of our investments in all 4 keys of our ‘Customer First’ strategy. People often talk about investments we make in price, but there are many ways we have invested in our non-price keys, people, products and shopping experience, to strengthen our connection with customers in our stores.

“For example, over the last several years, we've set out to improve the shopping experience by reducing customer wait time at checkout,” he said. “Customers have told us they do not like waiting in long lines. Based on that feedback, we developed a solution that has reduced the average amount of time a customer waits in line to check out to about 30 seconds today compared to around 4 minutes in the past. Our customers tell us they noticed the difference, and we are delivering a shopping experience that makes them want to return.”

Getting shoppers through checkout as quickly as possible is key to building customer loyalty and reported by Kroger as one reason earnings were up 9.6% in the three months ending May 25, 2013, compared to the same time a year ago.

Kroger Chairman and CEO Dave Dillon cited “inspired, Customer First service” for strong financial results including earnings of $481 million in the quarter ending May 25 - the 38th consecutive quarter of profits for the retailer’s continuously operating stores.

And Marnette Perry, Senior Vice President of Retail Operations, said: "The technology enabled us to execute at the front of the store without that additional [labor] expense. It's remarkable that we've been able to improve execution as much as we have without a big price tag.”

“Nobody likes to wait in line,” she said. “If we wanted to develop loyalty from our customers, we really had to respect their time and improve the checkout experience.”

Since the technology was deployed, Kroger’s score on customer-satisfaction surveys has improved 42 percent on the speed of checkout, Perry said. “There are 7 million shoppers at Kroger stores today – we’ll save them 25 million minutes today.”

Kroger executives said they learned something surprising from Kroger QueVision data that helped them boost certain orders. The system showed more customers than Kroger realized bought a small number of items in the morning and at lunchtime – and that express lanes would back up.

So Kroger added 2,000 new express lanes to its stores nationwide, which it credits with growing the number of small orders over the last two years.

And Kroger cites additional benefits besides happier customers. For example, the technology has helped boost sales at smaller urban stores with limited parking space – because customers get in and out faster, they free up parking spaces more quickly.

And though company officials originally anticipated they would need – and were willing to pay for – more cashiers if it shaved customer wait time, the cost of staffing did not rise. Irisys Queue Management technology is so smart, it makes scheduling more efficient.

About Blog

Queue Management is the next big technology for retailers, with many of the world’s largest stores rolling out Irisys systems in recent years. Find out more about our products and the industry on the Irisys Queue Management blog.